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Is It Time to Load Up on BlackBerry Shares?

Is there something to hold onto?

BlackBerry(NASDAQ:BBRY), the company formerly known as Research In Motion, is hoping to change the smartphone paradigm with the release of BlackBerry 10, its newest iteration of BlackBerry OS. The stakes are high and the chances are low, but if BlackBerry can defy the odds and ignite a resurgence in its market share, investors stand to be handsomely rewarded. Judging by the recent run-up in shares, it's now up the House of Berry to deliver on the hopes of optimistic shareholders. Speculation aside, is there something worth holding onto with BlackBerry?

Not so viralOn Jan. 30, when BB10 was officially announced to the world, the company decided to get social with it by asking Facebook users if they will be picking up the new BB10 smartphone, and if so, to "share" for yes. The intent was to use the power of social media to virally spread the word that BB10 is on the way, but it also acts as a quick and dirty way to gauge interest. Out of more than 24 million "likes" BlackBerry's Facebook fan page has, the specific post received roughly 100,000 likes and 22,000 shares. Granted, this isn't a scientific study, but as an early indicator, perhaps the new BlackBerry isn't something the public is dying to get its hands on. In other words, smartphone users may already have their needs met elsewhere.

Slow launch BB10 has already been made available in the U.K. and Canada, but it won't be entering the U.S. smartphone market until sometime in March. Allegedly, U.S. carriers take longer to test a new device, which is slightly problematic, given that the U.S. is the world's most important smartphone market, as it generates more ad impressions and revenues from app purchases than any other market. In the context of earnings, which are due out on March 28, there won't enough time to weigh in on BB10's reception in the United States.

Mr. Softy pushes hardIf regaining market share wasn't enough of a challenge for BlackBerry, couple it with the fact that Microsoft(NASDAQ:MSFT) and its Windows Phone ecosystem are hoping to make further inroads in 2013. At the end of 2012, IDC estimated that BlackBerry OS commanded 4.7% of the worldwide smartphone market, enough to be the No. 3 smartphone OS. By 2016, IDC expects BlackBerry to lose its No. 3 seat to Microsoft, which has the help of its far-reaching OEM network to aggressively drive the value of the Windows Phone experience compared with the competition. In terms of opportunity, it seems that BlackBerry has the most to lose. Given its resources, if Microsoft fails in the smartphone market, it won't even come close to putting the company out business. However, if BlackBerry fails, the question of solvency may quickly creep into investors' minds.

Unattended emerging marketsThe reason Google's (NASDAQ:GOOGL) Android commanded a dominating 68.3% market share at the end of 2012 was largely the abundance of sub-$250 unsubsidized smartphones available in emerging markets. This race-to-the-bottom approach manufacturers have taken with Android puts Google in position to effectively corner the feature-phone market. At first, BB10's penetration into emerging markets isn't likely to be meaningful, considering the Z10, BlackBerry's first BB10 phone, will carry a $599 unsubsidized price tag. By the end of 2013, BlackBerry is expected to release a total of six BB10 devices, some of which will be intended for the lower-end market.

Transition yearAt best, 2013 is likely to go down in the history books as a transition year for BlackBerry. BB10 is still very much within its infancy, and we won't see any real indication of its reception until the second half of 2013. At the same time, BB10 subscriber fees will be lower than what BlackBerry has charged for past iterations of its BlackBerry OS. Considering that its service revenues made up about 75% of BlackBerry's gross profit last quarter, this structural issue appears currently overlooked by investors, putting further pressure on the success of BB10. Combined, all of these factors don't lead me to believe that BlackBerry is a solid long-term investment.

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